The Year Ahead 2019

Our preview of what to watch for in business, politics, sports and more

Nikkei staff writers
December 26, 2018 14:43 JST

From Alibaba's leadership change to the rise of Generation Z, the next 12 months promise to be anything but dull. Here is the Nikkei Asian Review's preview of 19 trends, topics and events to watch in 2019.

Alibaba after Jack Ma

The mood may not be entirely festive when Alibaba Group Holding celebrates its 20th birthday on Sept. 10. That same day, founder Jack Ma Yun will step down as chairman of the e-commerce conglomerate.

"A big question is whether and how Alibaba will continue without Jack Ma," Joseph P.H. Fan, a professor at the Chinese University of Hong Kong, told the Nikkei Asian Review.

Alibaba became a household name under Ma, thanks in no small part to Singles Day, the Nov. 11 shopping event the company invented in 2009. It now surpasses the Thanksgiving shopping season in the U.S. in terms of sales.

Ma, who will retire as a board member in 2020, will be replaced as chairman by CEO Daniel Zhang Yong. Ma says he has been preparing his successor by making himself scarce at the company and giving Zhang complete authority to decide on investments up to 20 billion yuan ($2.89 billion). Nevertheless Fan has his doubts. "No one can replace Jack Ma in terms of his vision and his public image, which wins attention and perhaps trust from stakeholders." KENJI KAWASE, Nikkei Asian Review chief business news correspondent

A new era (literally) for Japan

When Emperor Akihito ends his 30-year reign on April 30, it will also mark the end of Japan's Heisei era. His elder son, Crown Prince Naruhito, will assume the throne the following day -- starting Year 1 of a new, as-yet-unnamed era.

The 85-year-old emperor announced his desire to abdicate due to health concerns in 2016. After much debate, the government passed a one-time law that exempted him from a Meiji-era (1868-1912) requirement that emperors reign until death.

Emperor Akihito celebrated his 85th birthday -- his last on the throne -- on Dec. 23. (Photo by Kei Higuchi)

The abdication saga has drawn attention to the fact that the imperial family, like Japan itself, is facing a demographic crisis. This is due in part to a male-only succession rule, which strips women of their royal status if they marry a commoner.

"The number of male family members is falling rapidly," said Naotaka Kimizuka, a professor at Kanto Gakuin University. "This is a serious issue in ensuring the sustainability of the family."

For now, the public is occupied with nostalgia over the end of the Heisei era -- and making plans for the special 10-day national holiday that will take place around the coronation. WATARU SUZUKI, Nikkei staff writer

The 5G revolution begins

Ordinary consumers -- or at least early adopters -- will finally be able to experience 5G technology in 2019, allowing them to take advantage of broadband-like speeds on smartphones and other mobile devices.

The telecoms industry is promoting 5G as a huge step forward, eventually forming the basis of futuristic capabilities such as holographic calls, mobile AI computing, autonomous driving and even remote surgery. In the nearer term, first-wave users will be able to experience high-definition video broadcasts of live events such as concerts or sports events.

Samsung Electronics, Huawei Technologies and possibly Apple are expected to introduce products using the new technology in 2019, but industry executives say they don't expect 5G services to reach critical mass right away.

"We expect to see a lot of 5G-ready devices in the market in 2019," said Joe Chen, president of mobile chipmaker MediaTek. "However the massive adoption of 5G technology will not become reality before 2020." CHENG TING-FANG, Nikkei staff writer

A turbulent year for markets?

The end of 2018 was a turbulent one for markets in Asia and much of the world, as investors fretted about U.S. interest rate hikes, China's economic slowdown and the trade war between Washington and Beijing. None of those worries look like they are going away in 2019, which could spell a bumpy ride for Asian markets.

The U.S. Federal Reserve plans to raise interest rates twice in 2019, a move that is expected to spark capital outflows from emerging economies. This could "affect Asia's economy negatively," says Yoshinori Shigemi, a global market strategist for J.P. Morgan Funds.

On the China front, the Organization for Economic Cooperation and Development has cut its growth forecast to 6.3% for 2019, and predicts a slowdown to a 30-year low of 6% in 2020. A major reason for its dampening outlook is the trade disputes with Washington.

Along with the trade war, Brexit and other political issues like India's election will be major themes to look out for. "With so much uncertainty, it will be difficult for investors to move assets, especially during the first half of 2019," said Kazuharu Konishi, chief fund manager at Mitsubishi UFJ Kokusai Asset Management. JADA NAGUMO, Nikkei staff writer

Modi seeks another term

Prime Minister Narendra Modi is hoping to secure a second five-year term in office in India's next general election, which is to be held by May 2019. But he may be facing an uphill battle after his party lost big heartland states in recent polls.

Indian National Congress, the main opposition, put in a stellar performance in these "semifinals," toppling Modi's Bharatiya Janata Party in Rajasthan, Madhya Pradesh and Chhattisgarh. Those victories helped INC and its leader Rahul Gandhi revive their fortunes, though the opposition is still not seen as strong enough to knock the BJP out of the central government.

Still, the national election will not be a cakewalk for Modi, who also faces the growing discontent of distressed farmers and rising unemployment.

The prime minister is "most likely to win re-election, but at the helm of a coalition rather than with an outright majority of BJP parliamentarians," say analysts at Eurasia Group, a political risk consultancy. KIRAN SHARMA, Nikkei staff writer

'El Clasico' and the future of Indonesia

Indonesia's presidential election in April will once again pit incumbent Joko Widodo against former Gen. Prabowo Subianto -- a rematch that has been dubbed "El Clasico" because both men are so familiar to voters. But Widodo may also face another persistent challenger in 2019: fickle currency markets.

A declining Indonesian rupiah tormented the Widodo government for much of 2018. At one point, the currency had fallen as much as 11% against the dollar, giving Widodo's rivals an opening. Even though inflation has stayed in check, vice presidential candidate Sandiaga Uno has been warning audiences of housewives about the threat of rising prices.

The latest polls show Widodo leading at nearly 55% support, with Subianto at 30.6%. To make up ground, "the Prabowo camp will probably look to combine economic nationalism with populism leading up to the voting day," said Jun Honna, professor at Japan's Ritsumeikan University and an expert in Indonesian politics. SHOTARO TANI, Nikkei staff writer

Bumps in the road

Authorities in Beijing may not like the phrase, but it seems that a "consumption downgrade" in China is beginning to bite.

U.S.- China trade tensions and a slowing economy are expected to weigh on Chinese minds as they consider whether to make big purchases, including cars and property.

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Chinese automakers just witnessed the first decline in the car market in 28 years. The China Association of Automobile Manufacturers, an industry body, predicted "zero growth" for 2019. Dealers are likely slash prices to pump up sales, analysts say.

And after years of spending more and more of their hard-earned money on houses, many urbanites are concluding that they simply can't afford a place of their own.

Now the property industry is facing a slowdown, with analysts forecasting prices to drop around 10% next year.

Some of the country's largest developers are holding mountains of debt after years of growth. Now they are scrambling to diversify into other industries such as technology, autos and entertainment -- with little success so far.

Many are pinning their hopes on Beijing, hoping that the authorities won't permit a sharp decline in a sector deemed "too big to fail." President Xi Jinping's pledge to make housing affordable will be put to test. NIKKI SUN, Nikkei staff writer

A return of the Mahathir-Anwar leadership?

Anwar Ibrahim enters 2019 in much the same position he was in some 20 years ago: in line to replace Mahathir Mohamad as prime minister of Malaysia.

The once close relationship between the two men turned sour in the late '90s, during Mahathir's first stint as leader. The two clashed over the Asian financial crisis, and Anwar was eventually jailed on sodomy charges that he says were fabricated for political reasons.

As part of an election-winning deal in 2018, however, Mahathir has promised to hand over power to his onetime protege "in a year or two."

The focus now is on the two men's relationship. One former minister recently proposed that they give the "1997 recipe" another try, with Anwar becoming Mahathir's deputy ahead of the leadership handover.

Anwar, however, seems to be playing his cards more carefully this time.

"I never push for [a succession deadline]," Anwar told the Nikkei Asian Review in an interview in October.

But he also issued a warning to any would-be challengers.

"I have forgiven those who jailed, insulted and accused me," Anwar told party members in November. "I am nice and friendly with everyone, but don't try to walk over me or I will take you on." CK TAN, Nikkei staff writer

Sonic boom: K-pop goes global

Forget Samsung Electronics' Galaxy smartphone or Hyundai Motor's Ioniq electric car. South Korea's most popular export just might be a seven-member boy band called BTS. The group topped the Billboard charts twice last year -- once in May with "Love Yourself: Tear" and again in September with the follow-up "Love Yourself: Answer."

In another indication of South Korea's soft power, music videos by BTS have drawn hundreds of millions of views on YouTube.

Taking advantage of BTS's global fandom, the group's agency Big Hit Entertainment plans to list on the Korea Exchange in 2019. Analysts say the agency is looking to challenge the industry's top listed company, SM Entertainment, which has a market cap of 1.2 trillion won ($1.06 billion).

"As K-pop fandom becomes more globalized, Korean bands are expanding their tours beyond Asia to the U.S. and Latin America," said Lee Ki-hoon, an analyst at Hana Financial Investment. "We expect the Korean entertainment industry will enjoy a great earnings season by 2020 thanks to global fans of Korean songs." KIM JAEWON, Nikkei staff writer

Elections and a possible coronation in Thailand

Thailand is set to hold a general election on Feb. 24, its 26th since the overthrow of absolute monarchy in 1932. The last attempt at a poll, in 2014, was prevented by street demonstrations and a coup that installed Gen. Prayuth Chan-ocha, then chief of the army, as prime minister.

Come polling day, Prayuth's unelected term will have run four years and nine months. Only one elected Thai government has ever served a full four-year term -- that of Prime Minister Thaksin Shinawatra, elected in 2001. Thaksin also pulled off two other unprecedented feats: getting re-elected in 2005 and increasing his parliamentary majority while doing so.

Thai Prime Minister Prayuth Chan-ocha has promised there will be a general election in February. (Photo by Akira Kodaka)

It remains to be seen if 2019 will also see a much rarer milestone -- a coronation. The last was that of King Bhumibol Adulyadej nearly 70 years ago in 1950. His son, King Maha Vajiralongkorn Bodindradebayavarangkun, succeeded his father upon the latter's death in October 2016. In 2018, Prayuth said the coronation ceremony would precede the general election, but in this it seems he was mistaken. Setting a coronation date evidently remains a royal prerogative. DOMINIC FAULDER, Nikkei Asian Review associate editor

Bent out of shape

Smartphone screens have grown larger and larger over the years, making it easier to watch a video but harder to fit them in a jeans pocket or small purse. A possible solution will arrive in 2019: foldable screens.

The new technology is expected to inject some needed excitement into the smartphone market, which has been slowing as makers struggle to come up with innovative features. Samsung Electronics and China's Huawei Technologies -- the world's No. 1 and No. 2 smartphone makers by shipments -- plan to launch their first foldable handsets in 2019.

"A new generation of technology breakthroughs is opening the door to a phase we have never seen before," Samsung CEO Koh Dong-jin said Nov. 8. Apple hasn't announced any plans for a foldable smartphone, but analysts say it could follow suit in the coming years. LAULY LI, Nikkei staff writer

Third time lucky?

Prime Minister Shinzo Abe is planning to raise Japan's consumption tax in October, part of his attempt to chip away at the country's massive debt. The question is, will he do it?

Abe has pledged tax hikes before, in 2015 and 2017, but he postponed the move out of concern that it would harm the economy. That's what happened in 2014, when a consumption tax hike resulted in a sharp downturn in consumer spending.

Abe seems to feel more confident now. Japan's economy entered its seventh year of growth in December -- its longest expansion since the end of World War II -- and the labor market is the tightest it has been since 1973. Hosting the Summer Olympics in 2020 is expected to provide a further boost.

But with the U.S. Federal Reserve expected to continue raising interest rates and a trade war raging between the world's two largest economies, 2019 may offer plenty of reasons for Abe to get cold feet -- again. MITSURU OBE, Nikkei staff writer

Trump-Kim II?

Donald Trump and Kim Jong Un are set to meet again in 2019, but it appears unlikely that this second summit will yield any more progress than their historic first meeting in Singapore last June.

The problem is that Washington and Pyongyang remain at odds over how to denuclearize the Korean Peninsula. The U.S. has repeatedly said it will not loosen sanctions on North Korea until the country takes concrete steps toward denuclearization. North Korea counters that the U.S. should reward it for the steps it has taken so far -- namely destroying a nuclear test site and a missile engine test site.

"President Trump says that he has good relations with Chairman Kim Jong Un, but it is nothing more than diplomatic rhetoric. Washington's trust in North Korea is at the bottom," said Choi Kang, vice president of the Asan Institute for Policy Studies. "Pyongyang is also stepping up its criticism of the U.S., saying it will take denuclearization actions only when sanctions are lifted." KIM JAEWON, Nikkei staff writer

Three milestones, one celebration

There will be three major milestones for China in 2019, though not all will be celebrated equally -- or even acknowledged.

From Beijing's point of view, the most significant will be the 70th anniversary of the founding of the People's Republic of China on Oct. 1. The party will be keen to play up China's success in surpassing the former Soviet Union's 69 years of existence to become the longest-lasting communist state.

It is a day that Beijing worried might not come. The causes of the USSR's collapse have been the subject of intense study among Chinese officials and scholars, and many major policy moves in recent years -- such as the assertion of party primacy over state institutions and the ongoing crackdown on ethnic and religious minorities -- can be seen in part as attempts to avoid Moscow's mistakes.

Two landmark student-led campaigns in China will also have anniversaries in 2019. The 1919 May Fourth movement, a series of protests reflecting youthful aspirations for national revival, fed directly into the founding of the Chinese Communist Party two years later. The 1989 Tiananmen movement, which saw students demand political modernization, culminated in a bloody crackdown that June.

Given the government's highly effective campaign to ban all references to the Tiananmen crackdown inside China, it is likely that only one of these movements will be officially remembered. ZACH COLEMAN, Nikkei Asian Review deputy editor

Malaysia goes to court

If 2018 was the year that saw a Malaysian "youth wave" election, 2019 may be the year of the blockbuster trial.

First in the dock is former Prime Minister Najib Razak, whose trial is scheduled for Feb. 12.

Najib is facing nearly 40 charges related to the multibillion dollar scandal at 1Malaysia Development Berhad (1MDB). His wife, Rosmah Mansor -- known for her extravagant spending on diamonds and luxury handbags -- is also awaiting trial on nearly 20 criminal charges, including money laundering and tax evasion.

Others to face trial are two former ministers in Najib's cabinet, as well as government officials, all for graft committed before the May 9 election. Low Taek Jho, the alleged mastermind of the scandal and a fugitive believed to be in China, has been indicted in absentia for the missing $4.5 billion in funds belonging to 1MDB.

The crackdown on corruption was part of the election manifesto of Mahathir Mohamad, whose victory over Najib triggered the first change of government since independence in 1957.

Many Malaysians rejoice at the prospect that the trials will improve the country's poor image since the 1MDB issues came to light in 2015. "Malaysia should act in a more aggressive manner to claim damages over our tarnished image," said Anwar Ibrahim, president of the People's Justice Party, in November. CK TAN, Nikkei staff writer

An early election in Singapore?

Singapore must hold its next general election by April 2021, but Prime Minister Lee Hsien Loong has hinted that it could come two years early.

Lee seems to be weighing his timing carefully. The trade-reliant economy will likely see a slowdown in the next 12 months, according to a survey of economists by the Monetary Authority of Singapore. All 23 respondents cited intensifying trade friction as a risk to growth. Public discontent over this, as well as planned tax hikes and the income gap, could provide ammunition for opposition parties.

The ruling People's Action Party revamped its executive team in late November. This included Finance Minister Heng Swee Keat being named first assistant secretary-general, a move seen as a key step for him to succeed Lee as prime minister.

If Lee -- the son of Singapore's founding father Lee Kuan Yew -- can secure a smooth leadership transition, it would go a long way toward convincing voters that the party is capable of navigating an increasingly turbulent global environment. KENTARO IWAMOTO, Nikkei staff writer

#MeToo comes to India

The #MeToo movement took off in India in 2018, exposing predators in entertainment, the media, academia, politics and business. The coming year may see further progress cemented, including tougher enforcement of workplace sexual harassment laws.

The movement -- which began in Hollywood in 2017 -- reached India when Bollywood actress Tanushree Dutta revived a 2008 charge of inappropriate conduct against noted actor Nana Patekar. In the months that followed, several prominent men accused of sexual harassment have lost their jobs, including veteran journalists, famous Bollywood directors and actors, and even one of Narendra Modi's ministers. In November, Flipkart co-founder Binny Bansal resigned as CEO of the e-commerce company following allegations of sexual assault by a former employee.

Businesses are already taking steps to counter harassment, such as reviewing their internal policies and carrying out stringent background checks on potential hires -- including their social media histories.

"The hashtag has become a household name," says Rituparna Chatterjee, an independent journalist and one of the most prominent #MeToo activists on Twitter. "The main challenge in 2019 will be to keep the conversation alive." ROSEMARY MARANDI, Nikkei staff writer

Japan scrums down for Olympic rehearsal

Tens of thousands of thirsty fans will converge on Japan in September to cheer on their teams in the first Rugby World Cup ever to be held in Asia -- and the first to take place outside of the sport's traditional heartlands. Japan and Russia will kick off the six-plus weeks of action in Tokyo, with the final taking place on Nov. 2 at International Stadium in Yokohama.

Billed as the world's third-largest sporting event, the tournament -- 48 games played in 12 stadiums across Japan -- will also serve as a dry run for the Tokyo Olympics the following summer. New Zealand's All Blacks are perennial favorites, while Japan will hope to improve on their performance in 2015, when they pulled off the biggest shock in the tournament's history to beat South Africa but failed to get out of the group stages.

Tickets are not cheap -- seats for the final start at 25,000 yen (about $220) -- but demand is high. Organizers say that more than 4.5 million applications have been received, with more than 40% coming from overseas. Fans will be hoping the host stadiums do not run out of beer -- as Yokohama did when Japan played Australia there in 2017. ANDREW SHARP, Nikkei Asian Review deputy politics and economy news editor

The rise of Generation Z

A big shift is coming. In 2019, Generation Z -- people born in or after 2001 -- will overtake millennials as the most populous generation in the world, according to a data analysis by Bloomberg.

Stepping out in Delhi: Generation Z is on track to outnumber millennials. (Photo by Kosaku Mimura)

Gen Z will represent 32% of the total population, while millennials -- those born between 1980 and 2000 -- will account for 31.5%.

The rise will come mainly from countries with rapid population growth, like India, which will be home to more than 470 million members of Gen Z -- 51% more than in China. Sub-Saharan Africa will also see a Gen Z surge. Millennials will continue to be the most dominant group in big economies like China, the U.S., Japan and Germany.

Growing up with smartphones and social media, Gen Z as a whole is a tech-savvy cohort whose rapid rise -- along with the increasingly digital nature of the economy -- is expected to transform the employment landscape. And as the next consumer juggernaut, Gen Z can look forward to being aggressively courted by marketers. JADA NAGUMO, Nikkei staff writer